ThreeSixty Group Announces Acquisition of FAO Schwarz

Company to Build on Iconic Brand Heritage with New FAO Schwarz
Branded Toy Collection and Unique In-Store Experiences Launching in 2017

October 04, 2016 09:00 AM Eastern Daylight Time

IRVINE, Calif.--(BUSINESS WIRE)--ThreeSixty Group, Inc. (“ThreeSixty” or the “Company”), a leading
provider of branded consumer products to the nation’s largest retailers,
announced today that it has acquired FAO Schwarz, one of the oldest toy
retailers in the world and an iconic brand synonymous with quality and
innovation. FAO Schwarz had been owned by Toys ‘R’ Us, Inc., the world’s
leading dedicated toy and baby products retailer, since 2009. The terms
of the transaction were not disclosed.

ThreeSixty Group is a leading cross-category designer, manufacturer and
distributor of consumer products to major retailers in the U.S.
representing over 70,000 retail stores. From its headquarters in
Southern California, the Company combines cutting-edge internal design
expertise and global sourcing capabilities to bring its retail partners
powerful, curated merchandise programs across diverse product
categories. These categories include toys and other children’s products,
holiday gifts, home décor, games, radio controlled vehicles and drones,
and athletic accessories — all marketed under a portfolio of owned and
licensed brands including Blue Hat Toy Company, Sharper Image, Black
Series, Discovery Kids, Smithsonian, and Animal Planet.

“We are humbled to have an opportunity to build upon the iconic heritage
of FAO Schwarz,” said Kirk McLean, co-founder of ThreeSixty Group. “For
over one hundred and fifty years, FAO has provided a magical experience
for children and we hope to keep this tradition alive by crafting fine
toys and transformative retail experiences for generations to come. We
are investing heavily in this brand and believe there is a tremendous
opportunity to build upon the heritage experience and nostalgia of FAO
Schwarz.”

The new FAO Schwarz toy collection designed by ThreeSixty will draw upon
the one-of-a-kind products and legendary in-store experience at the FAO
Schwarz flagship store in New York City. It will also honor the brand’s
legacy of innovation through the introduction of new “wow” items
intended to evoke the limitless possibilities and creativity of
childhood. The new FAO Schwarz toy collection and in-store experience
will be available at select retailers in the fall of 2017. Until then,
FAO Schwarz merchandise will be available online and at Toys’R’Us stores
across the country.

Since 1862, FAO Schwarz has been synonymous with quality and innovation,
offering one-of-a-kind playthings and creating cherished memories for
generations of children. Over more than one hundred and fifty years of
continuous operation, it evolved from a simple toy store to a must-see
experience at its flagship location in New York City that attracted
millions of visitors annually. FAO was the oldest toy store in the
United States and one of the oldest retail establishments of any kind
when its New York location closed in 2015.

“As great-great grandson of the founder of FAO Schwarz I and other
family members are proud of the legacy of wonder and play that FAO
Schwarz represents. We are excited to support ThreeSixty, the latest
steward of the brand, and hope they will build upon and strengthen the
FAO Schwarz legacy for this and future generations," said Eric Schwarz,
Chair of the FAO Schwarz Family Foundation and Co-Founder and CEO of
College for Social Innovation.

“As toy makers, the opportunity to walk in the footsteps of the most
iconic toy master is a dream come true,” said Johann Clapp, co-founder
of ThreeSixty. “Our first step in building upon the prestige of the FAO
Schwarz brand, will be launching aninnovative, premium toy
collection and creating unique in-store experiences that excite both our
retail partners and consumers. The collection will reflect the playful
and respected history of FAO Schwarz, and is just the first step in
revitalizing this iconic brand.”

Founded in 1999 as MerchSource, ThreeSixty has become a trusted source
for innovative, cross-category merchandise programs for major retailers
nationally. In 2011, MerchSource acquired its long-time sourcing
partner, ThreeSixty Sourcing, and together, began operating under the
parent company ThreeSixty Group. The Company has strong,
multi-department relationships with virtually every major retailer in
the United States, providing ThreeSixty with a diverse customer base and
an ideal platform for launching new brands and product categories.

“Since partnering with AEA Investors in 2015, we have been focused on
developing a strategy to acquire complementary businesses and consumer
brands,” said Mike Roberts, co-founder of the Company. “The acquisition
of FAO Schwarz marks the first of many opportunities we see ahead to
expand our platform both organically and through acquisition as we
strive to deliver more differentiated product offerings to our retail
partners.”

About ThreeSixty Group

ThreeSixty Group, originally known as MerchSource, was founded in
Southern California in 1999. Today, ThreeSixty designs, sources and
distributes consumer products across diverse categories under a
portfolio of owned and licensed brands. The Company provides curated
merchandise programs which it distributes to major retailers across
almost every retail channel in the U.S. representing over 70,000 retail
stores. In 2015, ThreeSixty received a majority investment from AEA
Investors LP, one of the oldest private equity firms in the U.S.

About AEA Investors LP

AEA Investors LP was founded in 1968 by the Rockefeller, Mellon, and
Harriman family interests and S.G. Warburg & Co. as a private investment
vehicle for a select group of industrial family offices with substantial
assets. AEA’s active individual investors (the “Participants”) include
an extraordinary network of more than 75 of the world’s leading
industrial families, business executives and former government leaders.
Today, AEA’s approximately 70 investment professionals operate globally
with offices in New York, Connecticut, London, Munich and Shanghai. The
firm manages funds that have approximately $10.0 billion of invested and
committed capital including the leveraged buyouts of middle market
companies and small business companies and mezzanine and senior debt
investments. AEA Private Equity invests across four sectors: value added
industrial products, specialty chemicals, consumer / retail and services.